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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
The Euro continues to face significant headwinds against the US Dollar, primarily driven by the increasingly hawkish outlook from the Federal Reserve. Recent remarks have heightened expectations for a more aggressive rate hike trajectory, thereby widening the interest rate differential between the USD and EUR. This divergence not only pressures the Euro against key technical levels but also shifts consensus positioning in favor of the Dollar as the focus remains on US growth amid tightening monetary policy.
Currently, our consensus target for EUR/USD is 1.1684 (median across various firms), with Morgan Stanley setting the highest expectation at 1.2000 for Mar26 and Scotiabank at the lower end with a target of 1.1700. This positioning starkly contrasts with the current spot at 1.1446, indicating a significant gap between market sentiment and bullish forecasts.
Several firms, including Investec with a Mar26 target of 1.1455 and HSBC aiming for 1.1700, are reflecting a more cautious approach, aligning with the bearish sentiment described in the headline. In contrast, RBC's more optimistic outlook, targeting 1.1600 for Mar26, illustrates a divergence within the consensus, though still below the recent highs noted in the market.
Forecast revisions from recent weeks show BNP Paribas adjusting its Mar26 target to 1.1600 and Dec26 to 1.2100, while Scotiabank revised down its Dec26 forecast to 1.1200. This re-calibration indicates a growing concern regarding the Euro's capacity to regain strength amid Fed policies emphasized in our recent analysis (/research/eurusd-ecb-rate-path).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Traders should monitor the 1.1400 support level closely; a break could accelerate selling. Additionally, upcoming Fed meetings will be critical for gauging further shifts in USD strength and potentially influence revisions in our consensus target of 1.1684.
Risks to this view
A significant shift in the Fed's stance, particularly if they indicate hesitancy in raising rates, could invalidate the current bearish outlook for the Euro. Additionally, unexpectedly strong economic data from the Eurozone might also provoke a change in sentiment.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
How we cover this story
Technical breakdown in EUR/USD confirms downside momentum; watch for support hold near 1.05 to assess whether move has legs.
Fed hawkish signals support USD recovery; EUR/USD correction likely continues absent ECB policy divergence clarification.
ING's fair value reassessment signals structural EUR/USD weakness; re-anchor portfolio hedges and monitor 1.05–1.08 pivot zones.
EUR/USD downtrend targeting 1.1400 suggests technical breakdown risk that could extend if US data remains supportive or ECB signals additional easing.
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EUR/USD spot at 1.1432 trails the 30-firm Dec-26 consensus of 1.1684 by 2.16%, with a 0.14 dispersion range signalling material disagreement on the path ahead.
EUR/USD spot sits 1.85% below the 30-firm median Dec-26 target of 1.1684, with a 0.14 dispersion range signalling material disagreement on the Fed-ECB endgame.
EUR/USD trades 1.69% below the 30-firm median Dec-26 target of 1.1684, with a 0.14 range separating Nordea's 1.24 bull case from Citi's 1.10 floor.